An ATO audit or review can be taxing for any business, specially for small and medium size businesses, mainly due to lack of appropriate level of internal controls and accounting practice. An ATO audit may not only cause a financial hardship but business disruption as well. To manage the audit/review process, you will require the business to either deploy its resources or hire an external advisor, both will have significant cost implications.
Common reasons for ATO audit
Some of the common reasons that triggers ATO audit for private businesses are:
- – Have financial performance that is out of sync compared with your industry;
- – Variance between tax returns and business activity statements;
- – Have poor record of lodging returns on time;
- – Don’t pay the right amount of superannuation to your employees;
- – Consistently show operating losses;
- – Own motor vehicles, but don’t lodge FBT return;
- – Big fluctuations between years;
- – International transactions;
- – Wrong disclosure in your tax return
Make sure you’re prepared for an audit
As a business owner, you don’t want to trigger an ATO audit for your business. Having a tax risk management process involving your business advisors is a good way forward. Have a good accounting system and periodical reconciliation process is in place, ensure that all supporting documents are available (for five years, some records may need to be kept longer).
As an experienced tax accountant and advisor for small and medium size businesses, DSV Partners proactively assists its clients in reducing the risk of a tax audit. We ensure our client records are updated and reconciled on periodic basis; your business performance is compared to industry peers, where available. If a client is selected for an ATO audit, we assist our clients in handling the process.
Should you have any questions or need assistance wait a tax audit or review, get in touch with DSV partners today!
Image Source: Boris Dzhingarov / Flickr
It is that time of the year again where tax payers would be thinking what deduction they are entitled to and what records they should keep to support those deductions. It is easy to overlook some of the applicable deductions. For tax payers who want to avail the benefits of all applicable deductions available to them, it would be a good move to talk to a reputable tax accountant, like DSV Partners.
Here is a list of expenses which are tax deductible:
- – Gifts and donations: You can claim a tax deduction for gifts or donations made to organisations with deductible gift recipients (DGRs) status. The amount of money gifted must be at least $2 or more.
- – Home office expenses: If you are an employee and you require the use of your computer, phone or other electronic device for work purposes, you may be able to claim the cost of running your home office. If you work entirely from your home, you can typically claim the occupancy cost of your home office space as a tax deduction, which includes a percentage of your rent/mortgage, equipment and furniture.
- – Income protection insurance: If you pay premiums for insurance against the loss of your income, you can claim a tax deduction for such premiums paid. However, you can’t claim life, trauma or critical care insurance premiums or insurance premiums paid out of your superannuation fund.
- – Professional membership: If you pay for a professional or trade association membership fees as part of your work, you can claim the cost of membership paid as a tax deduction. This includes union fees if you’re a member of a trade union. If you prepay the fees for next year before 30 June you can claim tax deduction in your current year tax return.
- – Expense to manage your tax affairs: You can claim fees paid to registered tax agent to manage your tax affairs for the year that you pay them. You can also claim the cost of travel; to the extent it is associated with obtaining tax advice.
- – Mobile phone expenses: If you use your personal mobile or internet for work purposes, you can claim cost of this expense as well. However, you can only claim business/work related calls/usage. You will need to keep a record of 4 week representative period in each income year to claim a deduction of more than $50.
- – Work related car expenses: People who use their personal car for work-related reasons, apart from driving to and from work, can usually claim fuel and maintenance costs as a tax deduction. As of 2016, these claiming methods have changed – you can either use a 12 week logbook or the cents per kilometer method. To be eligible for this deduction, you must own the car or lease the car. Moving from one job site to another, driving between offices is included for tax deduction.
If you need help with your tax return and deductibles, consider DSV Partners. We are a reputable accounting solutions firm based in Sydney that offers great tax and accounting services for our clients. Call us at 02 9633 4893 for more information about your income tax.
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